Tuesday, February 2, 2010

Monopoly - Why NOT Property in PF ?

Monopoly is one of the most popular board games. When Charles lost his job, he played The Landlord's Game and then created his own version of the game which later became Monopoly. Originally he was trying to include all the dynamics of property investment into the game but as time goes people find those are too complicated. Hence today's Monopoly is simplified until its a 8 years old game. Now new board games are developed everyday by adding back those left out rules - including Robert's Rich Dad.

Some who followed this blog long enough may already know that Property Investment is NOT a suitable personal finance tool.

Although there are ways to obtain guarantee income through property investment at personal finance level, but those who have never done it would think such method is ridiculous, impossible and paper talk only. Then when they use other approaches, they miss interpret active income as passive income. As a result they would do great at times but when the big boys swing another direction, they may get knocked so hard that they not only fell off the chair but they may enter a never return land. Even at this 21st century, generally people are still NOT able to digest stuff like strategy cost, personal finance scoping etc. Hence its just too 'risky' for anyone to simply use property investment as their personal finance tool.

We may get some resonances from some of the important key concepts which are still in Monopoly :

"Your goal is not just to get rich, you HAVE TO Bankrupt everyone else !"

In 21st century personal finance, we want to revert the 20-80 rule. We want most of the people to achieve finance freedom without bringing harms to the others. We want MOST of us to get what we want, we no longer want to just follow the big boys just for the sake of it-used-to-be-like-that. We may want to be rich but we have no interest to bankrupt anyone else in the process.

The nature of property investment is an active income. So its really a business. In business world, we do have to limit the ability of our opponents in order to grow big, stay big and be successful. But in "personal" finance, we don't have to.

But guess what, "Banks never run out of Money, they just print on plain paper ... " So you will NEVER able to bankrupt banks and banks will always be the winner.

On the more positive side, such problems only exist if the play ground is limited. ie. There are only so many lands, so many buildings, 4 stations and 2 utilities companies in Monopoly. In real world, New play ground is created all the time. As long as there are more play grounds created than the number of bankrupts, theoretically people who went bankrupt at one game can simply jump to another new game and play again.

Now do you understand why governments all over the world are creating Mega Projects all the time ?

Although Charles started Monopoly but now his whole thing has been "monopolized" by Parkers Brother where Charles was only one of the developers and Parkers Brother is the official owner. So much about monopoly huh ?